Probabilities and Statistics:

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i
isiping ETA R.
do: a space called s . space to Bra firsiz,
a subset of se consisting of the outcome that Witt, is an event.
event $$1$2E-T 388..." Bipro 455, IP risp 9505 55 35 set.
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the confusing sis) to field (1998), filtration (ifs). I 255 is
BIRK BAR TO TAKRO, Siglo E RRJE.
mer
In
event.
Probability is a measure a numerical decisions of the Frequency of an
l, a space of possible | outcomes
a subset of 32, F is called an event
a Specific collection of subsets (F) of his denoted as t o
42334: -5 event, F, 3. j event G. 10 pement Burim 328737.
A collection of these subsets ? is called a 6- field. I

A probability space (2,.F.P) Ei component

Stochastic process: a sequence ] 4 probabilistic events,
filtration : a (sequence of increasing fo- fields! we have
Fes contains Fs.
Ft. Farr, Fera
1813. Approach 8 8 16 } formality is specification. (Boundary in the 200
ng i 30 , ERE IS OTRO. Just a side thought
)3
moment generation function: (incorporates, the density or distribution function
and yields what are called moments of the distribution.
#so moment generation function can also characterize probability distributions.
# testas: Kth raw) moment instalt. Elx")
varience.

second moment.
E(X)
MxCt)
Elety la
moment generation function
definition
delet 3-0 ={2x) + 2ter) ... t:0 = EU)
delet eo = {2, 5x2) *** J 6-0 = E(49)
&
Now, if you can express the moment, you implicity have used the probability
density function. Therefore, moment generation function is an alternative
specificiation of the probability distribution.
Little difference
characteristic function,
Sx (t) = EleCity) = Expand the same way as
= 1+ (EEK) „Cit)" EXP

Financial Application (
Binomial Model.
Filtration to financer Pris 17).)
2 periods o.
i
2..
uce
e
que, ad, de, ad}
End state
ad
> del
At time zero. Fo= {2,
all the outcomes are
interpretation: at time zero,
possible.
At time 1.
F = { 22, Q, {na, ad}, {de, ad} }
At time 2.
Fa= { 22, 8, { mu}, {ad},{da}, {d}.}
@to suu} u suds - que, ad}
un u du
au udd

also
suit = { ud, du, dd}
The time zero,
{ua, ud, dee, dd}
mista.
Collective state of
information as of
go down.
the time I. we neether go up on
1
Time 8.
Suru, ad} Edi {du, da} in 1915 .
The time 2. we know which path thies are taken
{au, dus ant sud, dadd 3 mm
.
31924 Sipio 5-algelna 1734 na ment Bene trp} IA end time outcome į descube.
to time Inf, TA3527 prz information, the the up brancht, mintha Sun, ad}
RETRATA {ua, ad, ad}|
to time 225, Xa33 ir informations,
Tamementigues de path 32 50 38.00.
{ad, da, ad} = binipate to the 22.
As time Ong, sun, ud, du, ad} B 3 189 punts

Baxer BEA%7 I te, check whether it makes

sense and is consistant